Hanmi Financial Corporation (HAFC) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between August 12, 2019 and January 28, 2020, on August 12, 2019, Hanmi Financial Corporation (HAFC)announced that it would be unable to timely file its quarterly report due to an evaluation of “the classification of a single $40.7 million credit relationship… and the related adjustment to the allowance for loan and lease losses.” Hanmi acknowledged the review could affect the financial statements included in the report and could indicate a possible internal control deficiency related to construction lending, but failed to disclose that the troubled loan could lead to future provisions in the millions. Then, on January 28, 2020, Hanmi reported net income of $3.1 million for the quarter, including an additional “$6.9 million specific provision for loan and lease losses related to a previously identified $39.7 million troubled loan relationship.” To secure the loan relationship, Hanmi disclosed that the Company “received current appraisals on the personal property… and have provided for a specific allowance in the lower range of the appraised values.” On this news, Hanmi’s stock price fell almost 10% to close at $16.99 per share.
